Foot Locker Tumbles 35% as Nike Business Narrows

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Foot Locker Tumbles 35% as Nike Business Narrows
Credit: © Reuters.

By Dhirendra Tripathi – Foot Locker (NYSE: FL ) stock plummeted 35% Friday after the company issued a disappointing outlook, indicating Nike's (NYSE: NKE ) share in the company’s business will continue to shrink.

A 33% increase in quarterly dividend and the announcement of a $1.2 billion share repurchase program did nothing to arrest the slide in the shares.

Without naming Nike in its earnings statement Friday, the retailer said no single vendor should contribute more than 60% of total purchases this financial year, down from 70% in 2021 and 75% in the year before.

“This change reflects the accelerated strategic shift to DTC by one of the company's vendors and Foot Locker's ongoing brand and category diversification efforts,” the company said in a statement.

Foot Locker had, in its most recent annual filing, identified Nike as its largest supplier. Nike is reportedly investing in direct-to-consumer sales to rely less on third parties.

For the current year, Foot Locker is forecasting sales to fall by 4% to 6% while comparable sales could fall as much as 10%. On the lower side, comparable sales are seen down by 8%. Adjusted profit per share is seen between $4.25 and $4.6. Adjusted earnings per share in 2021 were $7.7 on total sales of $9 billion. 

Sales in the fourth quarter rose 7% to $2.34 billion. Adjusted profit per share rose by 12 cents to $1.67 and beat estimates.

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